Lehman Brokerage Settles With European Affiliate

By Phil Milford -
Oct 5, 2012

Lehman Brothers Inc. and its European
affiliate resolved lawsuits over more than $38 billion in
bankruptcy claims, a ``critical milestone'' in the distribution
of assets to customers and creditors, the negotiators said.

The tentative agreement requires documentation and approval
by a U.S. bankruptcy judge and the English High Court, according
to a statement today from James Giddens, the trustee liquidating
the U.S. brokerage, and Tony Lomas, joint administrator of Lehman
Brothers International (Europe).

“The agreement sets the stage for distributions that will
provide for 100 percent recovery of customer property,” Giddens
said. It “will allow for customer and creditor distributions
much sooner than if LBIE’s claims involving hundreds of
thousands of transactions were litigated.”

Lehman has faced demands from institutional creditors
including Elliott Management Corp. to make distributions to
hedge funds and banks after four years in liquidation. Giddens
had $25.4 billion in securities in hand as of March 30, Elliott
said in court papers.

The European affiliate said last year its clients were owed
$8.3 billion by the brokerage. LBIE’s claims were “the largest
unresolved contingency” in the brokerage liquidation, Giddens
has said.

Lehman Brothers Holdings Inc., the brokerage’s parent
company, filed the biggest bankruptcy in U.S. history in
September 2008. The New York-based company exited court
protection in March.

The parent company made its first payment of $22.5 billion
to creditors in April and a second payment of $10.2 billion on
Oct. 1. A third distribution is set for around March 30.